Bank of America Has It Right on Fees, So Back Off (Update 2)

Before a knee-jerk reaction against Bank of America's service fee changes, keep in mind that fees can be easily avoided.

The benefits of electronic banking.

Switching over to electronic banking is a winning proposition for all parties:

With electronic banking, it is very easy to keep track of your records. In this day and age, a three-ring binder of bank statements seems a little dated, and it takes up a lot of room, and Murphy's Law indicates that the key statement you need, will be missing.

With electronic bill paying, you save on postage, you avoid manually writing checks, filling out a check register, etc., and avoid check printing fees. It's also easy to pull up records to prove payments have been made.

You avoid a monthly service charge.

The bank's costs are reduced, since they no longer have to buy paper and envelopes, print and send expensive monthly statements.

When interviewed last week for our coverage of the CFPB investigation on overdraft fees, FBR analyst Paul Miller said "it costs between $100 and $120 a year to maintain a checking account for your customer," and that if the new regulatory paradigm meant banks were losing money on checking accounts, they would institute fee changes to "either push you out the door, or find a way to charge you."

It appears that Bank of America is following a well-thought-out plan this time to address a long-term revenue and expense problem.

The self-styled "consumer activists" will be clamoring, once again, for you to switch over to a credit union. Fine. But keep in mind, you will be giving up free access to a national network of 17,750 ATMs.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.